These days, contemporary art = big $

People have said it before, but now there's no denying it: This year the art market went bananas.

First came the news last summer that cosmetics heir and Neue Galerie impresario Ron Lauder had just paid $135 million for Gustav Klimt's 1907 "Adele Bloch-Bauer I" (pictured above), briefly making it the most expensive painting in the world and representing a quantum leap over the previous record holder, Pablo Picasso's "Boy With a Pipe" (1905), sold in 2004 for $104.2 million. But then, barely three months later in November 2006, the Klimt price was topped by the $137.5 million paid for Willem de Kooning's "Woman III" (1952-3) and the $140 million paid for Jackson Pollock's "No. 5" (1948).

The spring sales at the major New York art auction houses were completed last month and they continued the trend: Contemporary art raked in more than $871 million all together, a record. A solid 60 percent of the lots offered sold for more than their high estimate.

An abstraction by painter and suicide Mark Rothko brought the highest price, $72.84 million, but it was Andy Warhol who stole the show, with 22 artworks each selling for $1 million or more. His "Green Car Crash (Green Burning Car I) " (1963), a multiple silk-screen of a police photo onto canvas, sold for $71,720,000, more than four times the previous record high price for any Warhol.

If you can refocus your eyes after counting all those zeros, look at the numbers that really say something -- that is, all those dates that begin with "19--." Art prices have been levitating in a general way for most of the post-World War II years, but this is only the fourth year in a row that contemporary art has led the way in overall sales. Admittedly the Klimt, while a Modernist work, stretches the idea of "contemporary art," but all the rest of the painters mentioned are very much a part of our current art and practice, though all of them are dead.

And a closer examination of the data reveals surprising strength in the prices of quite contemporary artists.

A Jean-Michel Basquiat painting, for example, brought in $14.6 million (all together Basquiat accounted for $27,077,200 in sales this spring alone). Artists who are still very much alive and kicking were also scoring amazing figures, like $17.4 million for a Jasper Johns and $10.68 million for a Robert Rauschenberg. German painter Gerhard Richter's sales in May totaled some $20 million, just in New York City.

When it comes to art prices, we're not in Kansas anymore, and that is a literal statement. Contemporary art is soaring in large part because a globalized economy is shifting wealth away from traditional businesses toward an etherized global financial system; if you make your money at a hedge fund, say, like Pollock "No. 5" purchaser Stephen Cohen, buying up 17th-century Dutch masters looks so, well, provincial. Buying a contemporary artist, on the other hand -- from just about any country, though China, Germany, Holland, South Africa, Britain and the U.S. are hot -- looks hip, aware, international.

"Contemporary art appeals because it has a connection to our daily life," says Beth Venn, curator of modern and contemporary art and director of the Department of American Art at the Newark Museum. "Over the past five to 10 years we've seen a number of high-end collectors in Europe, who historically have been slower to come around to contemporary art, buying major recent artists and no longer reserving their biggest purchases for the Impressionists.

"(And) one thing that has been happening in contemporary art in this country is that dealers and collectors are benefiting from all those tutorials in art collection that museums began in the 1980s," says Venn, who used to manage the distinguished private Norton collection of contemporary art. "Collectors are usually at their best between the ages of 40 and 60 -- that's when they have the knowledge, time and wherewithal to start buying in earnest. And the Baby Boomers are right there right now, and there are an awful lot of them."

The extraordinary high prices for contemporary art are similar to those being racked up for a number of luxurious real properties, from classic cars to yachts -- they are an indication of a growing number of very rich people competing for the same objects. Like a stock market that hits record highs as the national economy displays its weakest rate of growth in four years, high prices at the top of the market are not a reliable gauge of popular well-being but a measure of economic disparity.

In the past, weaknesses in the largest property industry, real estate, have signaled an imminent collapse in art prices, as occurred in the early 1990s, when Impressionism led the market. Before "Boy with a Pipe," Vincent Van Gogh's "Portrait of Dr. Gachet" had been the world's most expensive painting, at $82.5 million, paid in 1990.

Impressionist prices may well be weaker today because there was so much international speculation in Impressionist painting during the 1980s, much of it driven by the now-moribund Japanese real estate market. ("Dr. Gachet" was bought by a Japanese paper company and immediately stored in a bank vault, where it is inspected once a year for damage by company officials and otherwise remains out of public view.)

Today's art market seems to defy that rule, rising even as U.S. real estate prices wobble. Is all this money in the art market healthy for art?

It certainly makes it much more difficult for museums to purchase contemporary art for the rest of us. Good or bad, though, it seems unlikely that the international art market, which actually went global long before many other commodities markets, will remain immune to the disruptions wrought by globalization everywhere else.

"One of the most persistent trends during this period has been the pooling of ever greater amounts of wealth at the top of the market," writes Jane Kallir in her annual analysis of market trends (released Tuesday) for the Galerie St. Etienne, one of the leading dealers in German Expressionist and contemporary art in Manhattan. "This phenomenon has been paralleled by the comparative stagnation of the middle market.¤.¤. . At the same time, an investment mentality has created a feeding frenzy at the bottom of the market, as collectors compete for works by 'hot' emerging talents, only to quickly drop the artists when they do not pan out. For those who remember a time when the art world was a slower-paced smaller place, this new market feels unhealthy and aberrant.

"Yet while the current art market has its weak spots, the insular, narrowly circumscribed art world of yore was surely no less flawed. For better or for worse, globalization and its concomitant reshuffling of wealth is transforming the art scene."